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Explaining Black-White Wage Convergence, 1940-1950: The Role of the Great Compression

  • Robert A. Margo

The "Great Compression" of the 1940s produced a substantial narrowing in wage differentials in the United States. This paper examines the role of the Great Compression in fostering black-white wage convergence in the 1940s. Using data from the 1940 and 1950 census public use samples, I show that between half and two-thirds of black white wage convergence at the sample means can be attributed to shifts in wage structure associated with the Great Compression. I also demonstrate that, by (temporarily) boosting the incomes of black parents. the Great Compression led to greater increases in schooling levels among black teens between 1940 and 1950 than would have occurred otherwise.

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File URL: http://www.nber.org/papers/h0044.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Historical Working Papers with number 0044.

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Date of creation: Mar 1993
Date of revision:
Publication status: published as Industrial and Labor Relations Review, vol. 48, April 1995, pp. 470-481
Handle: RePEc:nbr:nberhi:0044
Note: DAE
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Web page: http://www.nber.org
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  1. John J. Donohue III & James Heckman, 1991. "Continuous Versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks," NBER Working Papers 3894, National Bureau of Economic Research, Inc.
  2. David Card & Alan Krueger, 1990. "School Quality and Black/White Relative Earnings: A Direct Assessment," Working Papers 652, Princeton University, Department of Economics, Industrial Relations Section..
  3. Margo, Robert A, 1986. "Race and Human Capital: Comment," American Economic Review, American Economic Association, vol. 76(5), pages 1221-24, December.
  4. Smith, James P, 1984. "Race and Human Capital," American Economic Review, American Economic Association, vol. 74(4), pages 685-98, September.
  5. Blau, Francine D & Kahn, Lawrence M, 1992. "The Gender Earnings Gap: Learning from International Comparisons," American Economic Review, American Economic Association, vol. 82(2), pages 533-38, May.
  6. Smith, James P, 1986. "Race and Human Capital: Reply," American Economic Review, American Economic Association, vol. 76(5), pages 1225-29, December.
  7. Claudia Goldin & Robert A. Margo, 1991. "The Great Compression: The Wage Structure in the United States at Mid- Century," NBER Working Papers 3817, National Bureau of Economic Research, Inc.
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